Biocon Investors Presentation July 2013

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Biocon Investors Presentation July 2013

  1. 1. Innovative Science Affordable Medicine www.biocon.com Investor Presentation July 2013
  2. 2. Certain statements in this release concerning our future growth prospects are forward-looking statements, which are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated in such forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, amongst others general economic and business conditions in India, our ability to successfully implement our strategy, our research and development efforts, our growth and expansion plans and technological changes, changes in the value of the Rupee and other currencies, changes in the Indian and international interest rates, change in laws and regulations that apply to the Indian and global biotechnology and pharmaceuticals industries, increasing competition in and the conditions of the Indian biotechnology and pharmaceuticals industries, changes in political conditions in India and changes in the foreign exchange control regulations in India. Neither the company, nor its directors and any of the affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after this date or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. Safe Harbor 2
  3. 3. Biocon: Who are we? • Small Molecules • Biosimilars • Branded Formulations • Research Services • Novel Molecules Growth Segments Financials Outlook Agenda 3
  4. 4. Biocon: Who are We?
  5. 5. Biocon: Global Ambitions with Indian Roots Mission: “To be an integrated biotechnology enterprise of global distinction” Value Creation along 3 axes: Leveraging the India advantage to deliver high value, licensable R&D assets Strategic Research and marketing partnerships that provide global access Reducing therapy costs of chronic diseases. (diabetes, cancer & auto-immune diseases) 5
  6. 6. Evolving with the Times 1978 - 1999 1999 - 2004 2004 - 2009 2009 – 2014 2014 & Beyond An Enzymes Company Revenue: ` 32 Crores Building the India Business and expertise in biologics Revenue: ` 1,194 Crores People: 3,500+ Investment intensive phase with focus on R&D, capacity & partnership execution Revenue (FY 13): ` 2,538 Crores People: 6,700+ Transforming into a Biopharma company Revenues: ` 549 Crores People: 700+ Unwavering focus through the years on Innovation & Difficult to make, niche products to create tangible differentiators for sustainable growth 6 Poised for a global platform with launch of finished formulations & biosimilars in regulated markets
  7. 7. Group Revenue at ` 723 Crores (22% YoY growth) YoY Growth* across verticals: EBITDA at ` 175 Crores (EBITDA Margin: 24% ) R&D Expense: ` 43 Crores (10 % of Biopharma Revenue) PAT at ` 94 Crores (PAT Margin: 13% ) Financial Performance Q1 FY14 Highlights 8*YoY comparison of Q1 FY14 Sales vs. Q1 FY13 Sales; #CER: Constant Exchange Rates Business Vertical Absolute Growth Growth at CER# Biopharma 21% 19% Branded Formulations 17% N.A. Total Biopharma 20% 19% Research Services 26% 22% Total Sales 22% 20%
  8. 8. Novel Molecules Unlock Value through Licensing Growth Verticals ANDAs & 505(b)(2) filings Small Molecules Research Services Integrated offerings Insulins, MAbs & Other Biologics Biosimilars (Biologics & Insulins) Rapidly growing- India-centric business Branded Formulations EMERGING MARKETS FOCUSEMERGING MARKETS FOCUS Growth Verticals: Aligned with Shifting Paradigms 9
  9. 9. Aligning For Growth: Reorganizing for greater synergy Function Based Organization -----> Business Units Sustaining the Entrepreneurial Spirit: Agility in decision making Responsibility with Accountability Greater Synergy amongst functions: Aligning people to the greater goal Marketing Finance Manufacturing Small Molecules Generic Insulins Biosimilar MAbs … … Earlier Organization Structure New Organization Structure 10 R&D Branded Formulations
  10. 10. Growth Segments: Snapshot
  11. 11. Small Molecules APIs (Generic & Novel) Formulations 505(b)(2) & ANDAs Current Portfolio Constituents Statins Simvastatin, Atorvastatin, Lovastatin, Rosuvastatin, Fluvastatin & Pravastatin Immuno suppressants Tacrolimus, MMF & MPA Other Biopharma Orlistat, Fidaxomicin, 50+ other molecules Product Portfolio which leverage our core fermentation capabilities and have a high degree of complexity Early mover in niche products coupled with economies of scale. Portfolio based Approach 12
  12. 12. Biosimilars: Demystifying “a biological product that is highly similar to the reference product notwithstanding minor differences in clinically inactive components, and.. no clinically meaningful differences against the reference product in terms of the safety, purity and potency.” Large Molecules (proteins): greater complexity Very difficult to make and demonstrate bio-similarity; Extensive development process Process development and Capacity constraints Insulin & Insulin Analogs (4) Monoclonal Antibodies (3) Other Biologics (2) A biosimilar is… Unlike a small molecule… Current Portfolio Biosimilar Definition: Biologics Price Competition and Innovation Act of 2009 13
  13. 13. Herceptin ~6 Bn, 18% Avastin ~6 Bn, 18% Enbrel ~8 Bn, 24% Humira ~10 Bn,28% Neulasta ~4 Bn, 12% rh-Insulin ~ 3 Bn, 18% Glargine ~7 Bn, 35% Lispro ~2 Bn, 13% Aspart ~4 Bn, 23% Detemir ~2 Bn, 9% Glulisine ~0.3 Bn, 2% Biosimilars: Opportunity Total Insulins Market: ~ USD 19 Bn* The Insulin Pie Biosimilar MAbs & Other Biologic Opportunity : ~ USD 34 Bn* *Market Size of innovator products MAT March 2013, All figures rounded off to nearest USD Billion, %ages on absolute numbers 14
  14. 14. Combines Biocon's R&D and manufacturing prowess of biologics with Mylan’s regulatory & commercialization capabilities in the US and Europe *Market Size of innovator products in the current portfolio: MAT March 2013 Generic Insulin Analogs Biosimilar MAbs & other Biologics Global Market Size * ~ USD 14 Bn ~ USD 34 Bn Portfolio Constituents Glargine, Lispro & Aspart Trastuzumab, Bevacizumab, Adalimumab, Eternacept, Peg-filgrastim Mylan’s Exclusive Commercialization Regions US, Canada, Europe, Australia & New Zealand All regulated markets Upfront Received $ 20 Mn $ 18 Mn Structure: Upfront Payment + Cost Sharing + Supplies + Profit Sharing# Mylan and Biocon to share development and capital costs #Profit Sharing Arrangement in regions where Mylan has exclusive commercialization rights Biocon and Mylan have co-exclusive commercialization rights in other markets. Co-Development & Commercialization Partnership 15 Biosimilars: Collaboration
  15. 15. Portfolio Biosimilar Molecule Global Trials Generic Insulins rh- Insulin Glargine Lispro & Aspart Biosimilar MAbs and other biologics Trastuzumab Bevacizumab, Adalimumab Etanercept, Peg-filgrastim Process Development / Scale-up / Preclinical Phase 1/II b Market Phase III Emerging Markets First strategy coupled with a regional partnership commercialization approach Biosimilar Trastuzumab: patient recruitment completed for India Phase III trial. Generic rh Insulin registered in 45+ countries; generic insulin glargine registered in 10+ nations 16 Biosimilars: Pipeline
  16. 16. 16 Biocon’s First Manufacturing expansion overseas : Iskandar, Johor Asia’s largest integrated Insulins manufacturing facility Investment to the tune of ~$ 160 Mn in the first phase Development on-going at full steam 1st Phase expected to be completed by 2014 Key Highlights Biosimilars: Malaysia Insulin Facility
  17. 17. 17 Branded Formulations: Snapshot • An India Centric Business with Global Ambitions • Front Ending of our vertically integrated API & Biologics pipeline • Portfolio highlights: • Insugen & Basalog: India’s largest selling generic insulin & analog • BioMAb EGFR: India’s 1st indigenous novel MAb for head & neck cancer
  18. 18. INDIA PRODUCT RANKINGS# Cardiology Clotide 1 Myokinase 2 Oncotherapeutics Evertor 1 BioMAb EGFR 2 Abraxane 3 Immunotherapy Calpsor C, Picon, Tbis 2 Nephrology Tacrograf 3 Bio-products Ivnex 2 Comprehensive Care Genpirome & Cegava TZ 2 #: ORG IMS Latest MAT 2013, IPSOS Branded Formulations: Sustained Growth 18 65 86 259 347 101 FY 12 FY13 FY14 Revenues in ` crore Q1
  19. 19. * Includes biosimilars # Market Share as per latest MAT reports, IPSOS, LASSCHN Branded Formulations 19 Biologics* Remaining Portfolio India’s Fastest growing Insulin company Biocon: 34% | Sanofi: 15% | Novo: 5% #4 in overall insulin market #3 in the 40 IU Insulin market #1 in the Glargine vial market Biocon’s Volume Market share# 100 IU Insulin: 21% Glargine vials: 84% 79 130 179 107 130 169 186 259 347 FY11 FY12 FY13 Revenues in ` crore Market Share # of other flagship brands: BioMAb EGFR: 50% Evertor: 46% Picon: 33% Calpsor C: 34%
  20. 20. Novel Molecules: Pipeline Therapeutic Area Molecule Oncology Nimotuzumab Autoimmune Itolizumab Diabetes IN-105 Oncology Anti CD – 20 Oncology Fusion Proteins Pre- Clinical Phase II Phase 1 Market Phase III Discovery # India Trials Itolizumab: India Commercial Launch in Q2 FY14 Anti CD 20 (BVx 20) has entered the clinic in India Multiple Global Trials planned for Oral Insulin in collaboration with BMS 20 Currently on hold
  21. 21. Biocon will continue global development of the molecule through Phase II via redesigned trials. Partnership encompasses Financial, Strategic and Clinical Support throughout the development phase BMS will have an exclusive option post phase II to further develop & commercialise the asset worldwide (excl. India) Biocon will receive licensing fee in addition to potential regulatory & commercialization milestones, when BMS exercises its option Combines Biocon's novel asset and development experience with BMS’ novel drug development, regulatory & commercialization capabilities. Novel Molecules: Collaboration IN-105 Option Agreement: BMS (First-in-Class Oral Prandial Insulin) 21
  22. 22. Novel Molecules: Itolizumab Profile First-in-Class Therapy :Novel MOA with an excellent safety profile Very low Infection rates vis-à-vis other approved therapies Modulates TH17 Pathway: Frontrunner in the hot bed of research in auto immune space Marketing Approval received in India post a successful Phase III trial in Psoriasis (200+ patients); Commercial launch in Q2 FY14 Excellent clinical remission & safety data in phase III for Psoriasis Promising preclinical and clinical efficacy data in other auto immune diseases (Rheumatoid Arthritis, Psoriatic Arthritis etc) Key Differentiators 28 Weeks12 WeeksBaseline 22
  23. 23. Research Services: Snapshot 2000 Today India’s largest CRO with 1,500 + scientists, working with 16 of the Top 20 pharma companies in the world. Capital Investment of ~$120 Mn An investment of ~$20 Mn supported by 100+ scientists focused on building a world class CRO 23
  24. 24. Customized models Evolving Services Niche Offerings Integrated Platforms o Bioanalytical testing of small and large molecules o Antibody Drug Conjugate (ADC) development o Unique In-Vivo Models- Human tumour tissue Xenograft o Early and rapid toxicology evaluation (Cardiomyocytes ) o Commercial scale production of NCEs o High potency (cytotoxic) API manufacturing o Formulation development o Dedicated/customized infrastructure o End-to-end services o Risk sharing: Milestone based o Incubation: IP sharing o Integrated Drug Discovery and Development o Biologics Discovery and Development o Syngene- Clinigene axis Research Services: Capabilities & Collaboration Models 24
  25. 25. Research Services: Key Customers o Dedicated Infrastructure: Abbott Nutrition and R&D Centre o India focused product development addressing local needs with customized offerings tailored to local taste & texture preferences o Long term contract for 50+ FTEs focused on: • Maternal & Child Nutrition • Diabetes Care o Dedicated Infrastructure: BMS Biocon Research Centre o BMS’ largest research facility outside the US o 7 years contract, currently in its 4th year of operations o 450+ FTEs committed to integrated (end-to-end) research in a variety of therapeutic areas 25
  26. 26. 72 88 124 155 318 410 557 FY 11 FY 12 FY 13 FY 14 Research Services: Performance o PE Investment of ` 125 Crores for a 7.69% stake, assigning Syngene a post money valuation of `1,625 Crores o Investment earmarked for enhancing Syngene’s service offerings, capacities & fund future growth o GE brings in corporate best practices along with avenues for capability enhancement and new offerings 26 Revenues in ` crore Q1
  27. 27. Financials
  28. 28. Revenue 1,194 260 1,493 318 1,858 407 2,148 445 2,538 467 R&D Spend 60 13 79 17 118 26 137 28 164 137 EBITDA 372 81 455 97 573 125 579 120 596 110 Net profit 238 52 273 58 340 74 338 70 509 94 EPS (FV: ` 5) 11.9 13.6 17.0 16.9 25.4 FY09 FY10 FY11 FY12 FY08-12: Avg.exch.rate in that fiscal : 1Q FY13: USD 1 = ` 55.86; 1Q FY14: USD 1= ` 54.64 # Biopharma Sales excluding branded Formulations Financial Performance Q1 FY14 Q1 FY13 Revenue 723 | 129 593 | 108 R&D Spends 43 | 8 36 | 6 % of Biopharma Sales # 10% 10% EBITDA 175| 31 139 | 25 EBITDA Margin 24% 23% Net Profit 94| 17 79 | 14 PAT Margin 13% 13% EPS 4.7 3.9 All Figures in ` Crore /USD Mn except EPS FY13 28
  29. 29. 349 432 86 101 122 155593 723 Q1 FY13 Q1 FY14 Regulated Markets* 56%India 28% RoW 16% Revenue: Detailed 29 All Figures in ` crore unless otherwise specified Core Biopharma Licensing Branded Formulations Research Services Other Income Geography Wise Sales Breakup: ` 723 *: Including Deemed Exports
  30. 30. Core Business Margins: Detailed FY 09 FY 10 FY 11 FY 12 FY 13 Q1 FY14 Revenue 1,194 1,493 1,858 2,148 2,538 723 Less: Other Income 54 32 52 99 110 28 Less: Licensing Income 12 51 153 127 25 8 Core Revenues 1,127 1,410 1,654 1,922 2,403 687 EBITDA 372 455 573 579 596 175 Add: R&D Expense 60 79 118 137 164 43 Less: Other Income 54 32 52 99 110 28 Less: Licensing Income 12 51 153 127 25 8 Net EBITDA 365 450 487 490 625 182 EBITDA Margin 32% 32% 29% 25% 26% 26%
  31. 31. Outlook
  32. 32. 49% 5% 20% 10% 10% 40% 10% 25% 20% 5% 30% 20% 25% 20% 5% FY 12 A 2015 E 2018 E Small Molecules Biosimilars (Insulins + MAbs) Research Services Branded Formulation Licensing & Other Income ~ $450 Mn $1 Billion + ~ $700 Mn 31 Targeting $1 Bn Revenues in 5 Years Exchange Rate: 1 USD =` 50
  33. 33. • Commercialization of generic rh-Insulin in regulated markets • Launch of generic insulin glargine in large semi-regulated markets • Commercialization of biosimilar trastuzumab in India & other emerging markets • Clinical development of generic rh-Insulin for US Biosimilars: Global Development & Commercialization • Generic insulin plant in Malaysia comes on stream: augmenting capacity and cost advantage • Research Services add further facilities & capabilities to catalyze the next growth wave Capacity Enhancement • Development/Commercialization partnership in developed markets: generic rh-insulin, Itolizumab • Emerging Market partnerships for small molecules & biosimilars Partnerships Key Milestones: 2015 E 32
  34. 34. o Small Molecules - Improved product Mix o Research Services - Sustained Growth Momentum o Branded Formulations - Differentiated Value offerings o Biosimilars - Geographical Expansion in regulated markets o Novel Molecules - Out-licensing and Global Development Growth drivers supplemented by addition of new offerings (products, services & partnerships) Reaching $1 Bn by 2018 33 Looking Ahead 30% 20% 25% 20% 5% Exchange Rate: 1 USD =` 50
  35. 35. • Continuous evolution of the biosimilar & therapeutic regulatory landscape in major regulated markets • Regulatory approvals, Patient enrollment, R&D development, process refinement etc. determine the pace and quantum of the R&D activities Biosimilars & Novel Molecules: Regulatory Clarity • Relationship management: New Contracts, Contract Renewal & Scope Expansion R&D Outsourcing: Research Services Partnership Management 34 Risks…
  36. 36. www.biocon.com Innovative Science Affordable Medicine Investor Contact: Saurabh Paliwal Sweta Pachlangiya saurabh.paliwal@biocon.com sweta.pachlangiya@biocon.com
  37. 37. APPENDIX
  38. 38. ~955 ~70 ~180 ~1,205 2011 A Developed Markets Emerging Markets 2016 E USD Bn ~ 5% CAGR Global Pharma Market Source: IMS Institute of Healthcare informatics,The Global Use of Medicines: Outlook Through 2016 Emerging Markets to contribute ~ 75% of the Total Pharma Growth by 2016 Global Pharma Spending expected to cross $1.2 Trillion by 2016 Emerging Markets projected growth CAGR: ~10% Developed Markets expected growth CAGR: ~2% Emerging Markets growth driven by: Increased Government Healthcare Spending Growing Affluence Global Pharma Growth Catalyst: Emerging Markets 37
  39. 39. *includes: OTC, diagnostics and non-therapeutics sales worth $118 Bn in 2011 and $145 Bn in 2016 E Global Pharma Growth Catalyst: Generics & Biosimilars Source: IMS Institute for Healthcare Informatics, IMS Market Prognosis, May 2012 Small Molecules, ~ 425 Biosimilars ~5 Small Molecules, ~ 241 Biosimilars ~ 1 Generic Spending to Increase by ~75% in the next 5 years vs. Branded drugs’ growth of 9% Biosimilars will grow 5 fold to $5 Bn 956 ~1,205 USD Bn Branded* 714 Branded* 745 Generic 242 Generic 430 2011 2016 E Back 38
  40. 40. Small Molecules & Biosimilars: Comparison (1) Small Molecules Molecular Weight: Less than 700 Daltons Synthetic, Organic compounds [Chemistry based products] Well defined structure & relatively stable Monoclonal Antibody Molecular Weight: ~150,000 Daltons (~250x in size) Biologics- prepared in living organisms [Proteins] Complex physiochemical characteristics & heat sensitive 39
  41. 41. Small Molecules & Biosimilars: Comparison (2) Regulatory Requirements PK/PD (establishing BA/BE) CMC Studies Clinical Trial PK/PD studies Preclinical studies Biological Characterization Physio-chemical Characterization Generics: Small Molecules Biosimilars 40
  42. 42. Biosimilars: Regulatory Landscape 41
  43. 43. ~61% | Promoters ~ 8 % | Employees & ESOP trust ~31 % | Public Biocon Business Structure & Holdings Syngene International, India | ~88% Custom research, drug discovery Clinigene International, India | 100% Clinical development Biocon Research , India | 100% R&D- Novel Molecules Biocon Biopharmaceuticals | 100% MAbs and Biosimilars Biocon Sdn. Bhd, Malaysia | 100% Overseas subsidiary Biocon SA, Switzerland | 100% Overseas subsidiary NeoBiocon, UAE | 50% Overseas subsidiary BIOPHARMA SUBSIDIARIES RESEARCH SERVICES Spanning the entire Value Chain with capabilities ranging from discovery to manufacturing 42

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